Creativity, culture and the arts are being systematically removed from the education system, with dramatic falls in the number of pupils taking GCSEs in design, drama and other craft-related subjects, a new report has revealed.

A year in the writing, the Warwick commission report, published on Tuesday, examines all aspects of the creative arts sector: from film, theatre and dance to video games, pop music and fashion. It estimates the sector represents 5% of the British economy valued at £76.9bn.

The report describes arts audiences as overwhelmingly middle class and white. It says that the wealthiest, best educated and least ethnically diverse 8% of society make up nearly half of live music audiences and a third of theatregoers and gallery visitors.

Vikki Heywood, the chair of the commission, said two of the most eye-opening aspects of the inquiry were to do with cultural education and the lack of diversity in arts audiences.

The cultural and creative economies were one ecosystem, she said, and policymakers needed to realise that “if you fiddle around with the education system at one end then something at the other end goes wonky”.

Some of the most striking statistics are around education. Between 2003 and 2013 there was a 50% drop in the GCSE numbers for design and technology, 23% for drama and 25% for other craft-related subjects. In 2012-13, only 8.4% of students combined arts and science at AS level. The number of arts teachers in schools has fallen by 11% since 2010 and in schools where a subject has been withdrawn, drama and performance has dropped by 23%, art by 17% and design technology by 14%.

The report highlights a downward trend in participation in most cultural activities. For example, the number of five- to 10-year-olds who engaged in dance activities was down from 43% in 2008-09 to 30% in 2013-14.

The artist Bob and Roberta Smith said CP Snow’s “two cultures” distinction of 50 years ago – that society was split into science and the humanities – had been made “irrelevant by the emergence of the power of digital technology”.

He said: “We must totally overhaul the importance of art, design, dance, craft and drama, and teach them in a more contemporary and computer literate way to every child so that we do not deny our young people access to a £76.9bn economy.”

The arts broadcaster Lord Melvyn Bragg said he was glad to see schools and education mentioned so strongly. He said: “In my view, investment in the creative arts is the key to the lives of so many people in this country, and to the richer life of the country itself.”

The report insists that arts education should be an entitlement for all children. It believes the government’s focus on science, technology, engineering and maths needs also to include the arts. It says: “Policymakers are obsessed with a siloed subject-based curriculum and early specialisation in arts or science disciplines that ignores and obscures discussion around the future need for all children to enjoy an education that encourages creativity.”

David Lan, the artistic director of the Young Vic who served as a commissioner, said society needed creative scientists and that pupils’ involvement in dance, theatre, music and film would enhance their success in other non-arts subjects and “encourage young people to be hungry for equality and democracy”.

The report highlights “barriers and inequalities” that prevent “equal access for everyone to a rich cultural education and the opportunity to live a creative life”.

Statistics include the fact that higher social groups account for 87% of all museum visits.

The report says publicly funded arts “are predominantly accessed by an unnecessarily narrow social, economic, ethnic and educated demographic that is not fully representative of the UK’s population”.

Heywood said: “Progress on equality of participation and opportunity is too slow and we are all culturally and economically impoverished as a result.”

The findings also feed in to the ongoing debate around career opportunities for people from lower income families with Julie Walters recently telling the Guardian that she would not have a chance of making it as an actor if she was starting out today.

The report says it strongly suspects there are “lower than average numbers of students from low income backgrounds” in vocational and higher education courses which feed the cultural and creative sector but stresses “further systematic research is needed”.

The director Richard Eyre said the report showed an “absolute divide” between those who enjoyed the arts and those who felt excluded from them. He said: “The ‘choice’ of going to the theatre or the opera or an art gallery is a choice that doesn’t exist for vast numbers of people in this country, who, if they feel anything at all about art, feel disenfranchised.”

Last month, Chris Bryant, the shadow minister for culture, said one of his priorities if he became a minister would be to encourage diversity and fairer funding in the arts as well as encouraging the arts world to hire people from a variety of backgrounds.

He told the Guardian: “I am delighted that Eddie Redmayne won [a Golden Globe for best actor], but we can’t just have a culture dominated by Eddie Redmayne and James Blunt and their ilk.

“Where are the Albert Finneys and the Glenda Jacksons? They came through a meritocratic system. But it wasn’t just that. It was also that the writers were writing stuff for them. So is the BBC, ITV or Channel 4 doing that kind of gritty drama, which reflects [the country] more? We can’t just have Downton programming ad infinitum and think that just because we’ve got some people in the servants’ hall, somehow or other we’ve done our duty by gritty drama.”

The report was written by 16 arts sector leaders including Nicholas Serota, the Tate director, fomer ballerina Deborah Bull, and Roly Keating, the chief executive of the British Library.

Heywood said she wanted the report to be on the desks of all relevant secretaries of state after May’s general election. She said: “It has got to be a conversation that politicians can’t avoid.”

Among the recommendations are for a joined-up national plan in England that would involve civil servants and politicians from the the relevant departments: education, business, and culture, media and sport.

It calls for a free digital public space to be developed allowing all publicly funded creative content to be easily discoverable.

One of the biggest problems for the arts is national and local funding cuts, with Arts Council England cut by 32% and local government by 40% between 2010 and 2015.

The amount of money given to the arts – 0.3% of the total public spend – is “infinitesimal” compared with what they generate, the report says.

Further spending cuts to the arts “will undermine the ecosystem, creating a downward spiral in which fewer risks are taken, resulting in less talent development, declining returns and therefore further cuts in investment.”

The report has been widely welcomed. Sir Peter Bazalgette, the chairman of Arts Council England, said: “Two critical themes leap out of this welcome report – the importance of improving access to the arts, and that culture and the creative industries are one entity. The report’s proposals contain much welcome new thinking.”

Tessa Ross, the chief executive of the National Theatre, said the report made important points on “the diversity of the work on our stages, of our workforce and our audience, the need to enshrine arts education as an entitlement to all young people, including the most disadvantaged, and the desire of national organisations to extend our reach”.

The Department for Education said: “As part of our plan for education, we are ensuring all pupils experience a broad and balanced curriculum which will prepare them for life in modern Britain – the arts are a key part of this.

“We are clear that arts education should be every bit as rigorous as the rest of the school curriculum and we have strengthened the national curriculum in these subjects and reformed the music and art GCSEs and A levels to make sure this is the case.

“For 2015-16, we are providing £109m to support music, art and cultural education projects – an increase of £17m from last year – allowing thousands more pupils to benefit from a wide range of enriching activities.”